Michael: Can you get machines & raw materials for a credit of 30 days? You can use industry contacts or use some financial instruments.

John: That won’t be a problem.

Michael: And, wages anyway you need to pay after a month, that’s 30 days again.

John: And, what about other expenses like factory rent?

Michael: Isn’t that also after a month?

John: Yes, 30 days again!

Michael: So, essentially, you have a credit of 30 days for all your major expenses. The first part of my formula got covered: Buy on credit.

John: I see. And, the second part of the formula was?

Michael: Simple. Sell in cash. Do not give credit to your buyers, at least till the time you don’t have strong cash base.

John: OK, but still I am not able to get on how this formula will help me rotate my money fast. Am I missing something?

Michael: We are not finished yet. Please bear with me. Now, let’s understand the logic behind this formula.

John: Sure Sir.

Michael: Since you will be getting major expenses on credit, the $2000 will be an extra cash you have on the day you start.

John: Right.

Michael: As soon you start making sales, you have $2000 + amount of sales you made. Use this money for expenses that increase your sales. Like branding, packaging, marketing, new machines etc. Again, new sales mean more cash. Again, re-invest this extra cash for expenses that increase your sales. Repeat, repeat… After 30 days, not only you can pay your creditors, but also have an extra chunk of cash for next month.